Good morning, and welcome to Insteel Industries' first quarter 2024 earnings call. My name is Carla, and I will be your operator for today. To register your question for today's Q&A, please press star followed by 1 on your telephone keypad. If you wish to revoke your question at any point, please press star followed by 2. I will now hand over to your host, H. Woltz, CEO, to begin. Please go ahead when you're ready. Thank you. Good morning. Thank you for your interest in Insteel, and welcome to our first quarter 2024 conference call, which will be conducted by Scot Jafroodi, our Vice President, CFO, and Treasurer, and me. Before we begin, let me remind you that some of the comments made in our presentation are considered to be forward-looking statements that are subject to various risks and uncertainties, which could cause actual results to differ materially from those projected. These risk factors are described in our periodic filings with the SEC. The recent environment has been challenging for the company in view of inventory accumulations throughout the supply chain and a significant downward reset in steel prices that occurred following several quarters of extreme supply tightness and significant market price escalations. We believe these headwinds have about run their course, and we continue to be optimistic about the underlying level of demand for our products. I'm going to turn the call over to Scot to comment on our financial results for the quarter and the macro environment, and then I'll pick the call back up to discuss our business outlook. Thank you, H. And good morning to everyone joining us on the call. As we anticipated, business conditions remained challenging during the first quarter of fiscal 2024, as we continued to navigate through the ongoing pressure of narrowing spreads between selling prices and raw material costs, coupled with elevated unit manufacturing costs. As a result, net earnings for the quarter declined to $1.1 million, or 6 cents per share, from $11.1 million, or 57 cents per share in the prior year period. Net sales for the quarter fell 27.1% from a year ago, driven primarily by a reduction in average selling prices as shipments remained flat. The decline in ASPs for the quarter reflects a persistent competitive environment and a steep decline in steel scrap prices over the past year. Sequentially, ASPs dropped by 7.9% from the fourth quarter as pricing pressure continued during the period, driven by both ongoing domestic competition and the growing impact of low-price imported PC strand. As we move into the second quarter, there are indications that the decline in our selling prices may be ending. Steel scrap prices reversed their downward trend during the quarter and have risen by $80 since November. Wire rod producers have followed, implementing price increases in December and January. In response to the rising cost of our raw materials, we have initiated our own price increases earlier this month, extending across most of our product lines. The start of an upward trend or a leveling out of prices due to these increases could put an end to a headwind that has been negatively impacting our results over the last year. Shipments for the quarter, which have historically been our slowest period of the year due to the onset of winter weather and holiday schedules, were essentially unchanged from the same period last year, but down 16.1% sequentially from Q4. Volumes during the quarter benefited from improved shipping levels within our residential construction end markets, helping offset ongoing weakness in our infrastructure and commercial markets, which continued to be impacted by project delays, customer destocking, and weak demand in certain regions of the country. Gross profit for the quarter declined $11.5 million from a year ago, while gross margin narrowed 550 basis points to 5.2%. On a sequential basis, gross profit fell $7.7 million from the fourth quarter and gross margin decreased 370 basis points. The continuing compression of spreads can be attributed to the pricing pressures I mentioned earlier, with the year-over-year decrease in ASPs surpassing the reduction in our inventory carrying values. As noted earlier, in response to the recent escalation in our raw material costs, we've implemented price increases this month, which should favorably impact our second quarter spread and margin, as higher selling prices will be matched against the consumption of lower-cost inventories under the first in, first out accounting methodology. Apart from the spread compression, we also experienced higher unit conversion costs as we continued the planned reduction of finished good inventories in certain plants. This led to operating inefficiencies and elevated unit conversion costs, which were further amplified by ongoing inflationary cost pressures. However, as we move into the second quarter, we expect a reduction in unit conversion costs as operating levels are gradually increased. SG&A expense for the quarter decreased $800,000 to $6.4 million, or 5.2% of net sales, from $7.1 million, or 4.3% of net sales last year, mainly due to lower compensation expense under our Return on Capital-ba sed incentive plan, which was negatively impacted by weaker results in the current year period. Our effective tax rate rose to 27.2% from 22.9% a year ago. The increase was largely driven by permanent book tax differences and the effect of a discrete tax item, which had an amplified impact on our rate due to the lower pre-tax earnings. Looking ahead to the balance of the year, we expect our effective rate to run close to 23%, subject to the level of pre-tax earnings, book tax differences, and the other assumptions and estimates that compose our tax provision calculation. Moving to the cash flow statement and balance sheet. Cash flow from operations provided $21.8 million of cash in the first quarter. This is primarily due to the net change in working capital, driven by a reduction in receivables, reflecting the usual seasonal slowdown in sales, and a decrease in inventories due to the lower average unit carrying values. Our inventory position at the end of the quarter represented three months of shipments on a forward-looking basis, calculated off of our forecasted Q2 shipments. Finally, our inventories at the end of the first quarter were valued at an average unit cost lower than our first quarter cost of sales, and now approximate current replacement costs, which should favorably impact spreads and margins during the second quarter as we consume the lower-cost material. We incurred $12.3 million in capital expenditures in the first quarter and remain committed to our full-year target of $30 million. H will provide more detail on this topic in his remarks. In December, we returned $48.6 million of capital to our shareholders through the payment of a $2.50 per share special dividend, in addition to our regular quarterly dividend, marking the highest special dividend the company has paid, and seventh year over the last eight years, we have paid a special dividend. Also, during the quarter, we repurchased $539,000 of our common equity, equal to approximately 19,000 shares. From a liquidity perspective, we ended the quarter with $85.6 million of cash on hand and no borrowings outstanding on our $100 million revolving credit facility, providing us ample liquidity and financial flexibility going forward. As we move into the second quarter of fiscal 2024, we expect gradual improvement in our construction end markets. Leading indicators for nonresidential construction spending, architectural billings, and Dodge Momentum Index imply relatively stable conditions going forward. In November, ABI remained in negative territory for the fourth consecutive month, with a score of 45.3. Any score below 50 indicates a decline in business conditions. However, despite the low score, there were positive signs within the report, as there's indications that credit conditions are beginning to ease, with firms noting an increase in inquiries for future projects. The Dodge Momentum Index, another leading indicator for nonresidential building construction, rebounded 3% in December, rising to 186.6, with commercial planning improving 1% and institutional planning up 6.1%. On a year-over-year basis, the overall index is lower by 2%. Dodge noted that despite ongoing labor and construction cost challenges, there are a substantive number of projects currently in the planning stages that will support construction spending into 2025. Turning to the macro indicators of our construction end markets, the monthly construction spending data continues to remain strong, with the November report showing total spending on a seasonally adjusted basis, up approximately 11% from last year, with nonresidential construction up 18%, with public highway and street construction, one of our larger end uses for our products, up over 15%. However, while construction spending remains elevated, U.S. cement shipments, another measure that we track, continued to lag 2022 levels, as shipments were down 3.6% for the month of October and 2.9% year-over-year. This concludes my prepared remarks. I will now turn the call back over to H. Thank you, Scot. As we commented last quarter, the difficult Q1 operating environment was expected as we faced headwinds, including declining steel prices, inventory liquidations by customers, the need to align our finished goods inventories to reflect lower shipments, and finally, the normal seasonal downturn in construction activity. As a first in, first out reporter, declining steel prices unfavorably affect reported earnings as a matter of simple mathematics. The particularly sharp increase in steel prices during 2021 and 2022 produced a tailwind for earnings during these periods, and the sharp reduction of prices during 2023, extending into Q1 2024, created a substantial headwind for the company that was exacerbated by inventory liquidations and inflationary pressures on costs. Fortunately, it appears that pricing is heading up. More steel price stability should contribute to an improved operating environment for the company. As mentioned in the release, shipments of reinforcing products into the housing markets have recovered nicely since collapsing beginning in May 2022, at the onset of the Fed's interest rate increases. Margins have been compressed, however, as higher-cost inventory flowed through cost of sales, a process that's now behind us. Shipments of welded wire reinforcement into infrastructure markets continue to show weakness, particularly in the Midwest and Western markets. While customers are, by and large, busy, many have storage yards that are full of finished products due to contractor delays, and others are reducing inventories. While there's not objective data to support our view, it's not surprising that inventory corrections would occur following the recent extreme tightness of supply. This phenomenon was repeated throughout the supply chain, and we experienced the same dynamics in our raw material supplies. If we are correct, Insteel shipments and productions should accelerate as seasonally favorable weather patterns displace the winter chill. PC strand shipments were flat for the quarter, although the mix improved. As mentioned in our last two earnings calls, we are increasingly affected by low-priced imported PC strand. For instance, the average unit value of imported PC strand for November quarter to date, which is the most recent data, was lower than the domestic market price for wire rod, the raw material from which PC strand is produced. The industry is carefully scrutinizing strand imports and will pursue any trade actions that are justified. We're optimistic about the impact on our markets of the Infrastructure Investment and Jobs Act, although it's still difficult to point to any specific projects that have affected demand. With respect to IIJA, the Secretary of Transportation has acknowledged, quote, "Delays of one, two, three, or more years between funding, when funding is appropriated and authorized, and when those dollars are assigned to a project." Unquote. Meanwhile, of course, inflation is impacting project costs and jeopardizing the viability of some projects. Despite these obstacles, we believe that IIJA funds will ultimately be allocated to projects and spent as intended, with a beneficial impact on our industry. The question is when, not if. Turning to CapEx, we indicated in prior calls and press releases that CapEx for 2024 was expected to come in at approximately $30 million. Following 2023 CapEx of $30.7 million, we have been asked whether there's been a permanent step-up in CapEx expectations for the company. The answer is no. On an ongoing basis, we would expect CapEx to range closer to depreciation and amortization, and to be elevated in years we elect to expand capacity or incorporate new technology into our facilities through equipment replacement. As a reminder, the CapEx amounts for 2023 and 2024 are heavily influenced by the addition of three new production lines at our welded wire reinforcement plants, and the addition of a production line at a PC strand plant. The scale of these additions is not a recurring event. The investments we're making in state-of-the-art technology will expand our product capabilities and favorably impact our cash cost of production. Companies that fail to make such investments will become increasingly uncompetitive. As you know, Insteel continues to be debt-free and has substantial flexibility to make decisions for the long-term best interest of the business. Looking ahead, we're aware of the substantial risks related to future performance of the U.S. economy, and we're monitoring the environment. We believe that in addition to elevated interest rates, heightened conservatism among customers that are concerned about the macro environment could be contributing to a slower market recovery. In any event, we're well-positioned to aggressively pursue actions to maximize shipments and optimize our costs, and to pursue growth opportunities, both organic and through acquisition. This concludes our prepared remarks, and we'll now take your questions. Carla, would you please explain the procedure for asking questions? Thank you. If you would like to ask a question, you may do so by pressing star followed by one on your telephone keypad. When preparing for your question, please ensure your device is unmuted locally. If you wish to revoke your question, please press star followed by two. We will now take our first question from Julio Romero from Sidoti & Company. Julio, your line is now open. Please go ahead. Thanks. Hey, good morning, H., and good morning, Scot. Good morning. To start, I was hoping you could update us. Hey, good morning. I was hoping you could update us on the competitive pricing pressures that you spoke about last quarter in October. And has the rise in steel scrap kind of eased some of those competitive pressures? Yeah, of course, it's always difficult to know exactly what drives behavior in the markets. But I would suspect that the entire marketplace has experienced the rather disappointing volume experience that Insteel has seen, and there's been an overreaction by certain competitors to believe that reducing price will stimulate volume. And of course, as steel costs came down, I suppose that competitors believed that they would be able to offset lower average selling prices with lower steel costs. Of course, that dog chases its tail for quite a while. So the bottom line is, we were glad to see that steel scrap prices stopped their free fall. We're glad to see that the overall steel market, in our segment of wire rod and long products, has begun to stabilize and move up. We think that the stable steel market that we see in front of us for the next few months will certainly benefit our operating environment. Got it. That, that's very helpful. And I guess, that stabilization, you know, one would think would lead to more rationality within the marketplace, at least on the, on the domestic side. But I'm curious if you're seeing a divergence on, on the imported side, and if, and if there's any notable kind of differentiation between, pressures you're seeing from domestics versus imports? Are you referring to our raw material, Julio, or are you referring to import competition with our finished products? I'm referring to the finished product side, and if the imported finished products are still kind of underpricing domestics such as yourself. Yes, that is the case, and it's interesting in that import volumes of PC strand are actually down, but pricing for imported products has really collapsed. So in certain segments of the PC strand business, imports are a major competitive factor, and in that area, we have definitely been affected by that import competition. Julio, this is not new for the company. We've experienced this over and over and over again, to the extent that today we have 22 dumping or countervailing duty orders against foreign countries. And if the kind of destructive pricing that we're seeing now continues, I think you can expect to see more trade activity by the domestic PC strand industry. Got it. That's very helpful there. And then, you know, typically, when steel scrap prices reverse towards the positive and when finished goods prices also reverse towards the positive, you typically see a one quarter kind of FIFO tailwind, as you benefit from those higher prices of finished goods and the consumption of lower priced inventory. Do you foresee that on the horizon? And if so, what's maybe your best guess as to when the timing is realized within the P&L? Well, it's a day-to-day sort of issue with us. We did announce price increases across practically all of our products that were effective the first of January. We are collecting those increases as we speak. What next week brings is hard to say, but this week we're collecting the increases, and if that were to continue for the quarter, then you would see the impact of those increases in our Q2 results. Understood. I'll hop back in the queue. Thanks very much. Thank you. Thank you. As a reminder, if you'd like to ask a question, please press star followed by one on your telephone keypad. We will now take our next question from Tyson Bauer from KC Capital. Tyson, your line is now open. Please go ahead. Good morning, gentlemen. Good morning, Tyson. Just to follow up on Julio's last question, as he's mentioned, that we have seen, historically, that sometimes you'll overshoot for a quarter, and then we end up in this little yo-yo situation on the margin. But when you've had price increases or announced price increases, you've also benefited from increased shipments ahead of those price increases, and I'm wondering if that will be reflected in Q2, or because we're in a seasonally weaker quarter, that somewhat gets muted as opposed of if this happened during the summer months. I think that shipments for our Q2 will probably be affected by weather conditions as much as any quarter for the company, and it's hard to know what the impact will be. But traditionally, either Q1 or Q2 is our lowest shipping quarter. I suspect that Q1 will be our lowest shipping quarter, that Q2 will be better, but it is weather affected. But in terms of whether this would be this environment would be more beneficial in the, you know, in the summer months and the winter months, I don't really think so, Tyson. I mean, except for the multipliers higher as we ship more, we ship more product. But the change is, I think, the important issue here, and it's very welcome at Insteel. I think the other thing that's important to understand is just how volatile this raw material market has been over the course of the last 18 months. We've seen highs that are unprecedented, and then we've seen those numbers drop back to lows, and that whipsaw effect is going to affect Insteel's results just by a matter of simple mathematics, and it's just part of the business. Okay. Well, it sounds like you're implying that there's been really no pushback to your price increases. Would that necessitate further price increases? ... Well, I mean, there's always pushback to price increases. But I think the magnitude of increases in costs that we've seen are undeniable, and I don't think there's any competitor in our industry that would expect to absorb those raw material increases. And I think the customer base is pretty realistic about sources of supply. So I think supply and demand have matched up in a way that makes this price increase round look attainable. What happens in the future is going to be determined by the strength of demand for our products and also by what happens in the overall steel market. And it is just beyond us to be able to project that past a month or two out. Were you the industry leader in implementing the price increases, or were you following others within the industry and their actions, or have others followed your actions now? We are typically the leader in the industry, and we have seen others follow our actions. Okay. Inventory levels, I think we're $9 million below where we were the prior quarter, which you have some seasonal lapse in there. What's the split between the raw material and the finish? And is that split something that was impacted by delayed shipments at the end of the quarter, or is that fairly normal split from what you've seen in prior quarters? It would be a fairly normal split, Tyson. There are a couple product lines where we've needed to reduce finished goods inventories. I don't think that you'll see our raw material inventories fall any further than where they are today. They're at a very comfortable level. And of course, raw material inventories are a function of steel mill service levels. The worse the service levels are and the longer the lead times are extended, then the higher the inventory levels we end up carrying. And the other real driver there is our activity in offshore markets, which is today at a low ebb. So our raw material inventories are comfortable for the state of the business. And our finished goods inventory liquidations are about complete. But I wouldn't say that there's any change in the split between raw materials and finished goods that would be surprising. The overall level should be, as we gear up for the warmer seasonality, we'll start to see the inventory amount creep up as we get into- Yes. the end of Q2 forward? Okay. Yes. Sounds like- Correct. Scot, was there no incentive calculations or pay compensation that was included in Q1? So does that imply a true-up possibility in future quarters that may have better profitability? Yes, there was no expense pickup in Q1 for the incentive plan, but... And yes, it would, improving results in Q2, Q3 would accelerate that. Okay. And when we look at Dodge, we look at ABI, we look at all their AIA data, how much of that do you think is as far as the expected projects having better numbers, is really dependent upon rate cuts and when those rate cuts occur, that would spur actual activity, whether that be in housing, commercial, or otherwise? It seems like the infrastructure piece will be there, given state and local municipality budgets on DOT with the matching of the federal funds. So that side seems to be fairly high conviction level, that'll show up. What about the residential and more the commercial side? Is that more rate dependent? I think in residential, higher rates have already had the impact. And as you can see from new home construction, which is the primary consumer of our product, it hasn't been hurt nearly to the extent that overall home sales have been hurt by higher rates. So I think on the new construction side, that trauma has run its course, and that we should see reasonable market conditions going forward. Now, we may not be building 2 million homes a year, but it's not 1.2 million either. So I think it's run its course, and really the issue for us in that market over the last few months has been more margin compression than it has been volumes. Volumes have recovered pretty nicely. Commercial construction has undoubtedly been affected by higher interest rates, particularly speculative projects that are not undertaken by owners. I think interest rates have been high enough and the change has been dramatic enough to make some projects uneconomic. And we see many of those coming back to market for requotes time and time again, just as investors assess the viability of projects. But that market has been adversely affected. And certainly, if interest rates were to begin coming down, I think it would have a beneficial impact there. All right. Thank you, gentlemen. Thanks, Tyson. Thank you. We have no further questions registered. So with that, I will hand back to your host, H.O. Woltz, for final remarks. Okay, thank you. We appreciate your interest in the company. We look forward to our next call, where we fully expect to report much improved results. Thank you. This concludes today's call. Thank you for your participation. You may now disconnect your lines.